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V4583-16 25 October 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · aportaciones no dinerarias

Special regime for non-monetary contributions applicable if LIS requirements and valid economic reasons are met

A Spanish tax resident has enquired whether contributing their shareholding in one entity to another can qualify for the special regime under the Corporate Income Tax Act (LIS) and if their underlying reasons are valid. The Directorate General of Taxes (DGT) has ruled that this is possible provided the requirements regarding shareholding and economic activity are satisfied, and that the motives of risk separation and reinvestment are considered valid.

The question raised

Question posed: Whether the proposed transaction could qualify for the special tax regime regulated in Chapter VII of Title VII of the Corporate Income Tax Law. And whether the economic motives can be considered valid for the purposes of applying the aforementioned special regime.

The DGT's ruling

The contribution of shares may qualify for the special regime under Article 87 of the LIS if the receiving entity is a resident, the contributor maintains at least 5% of the equity, and the contributed entity does not have the management of movable or immovable property as its main activity. To determine the entity's activity, securities shall not be counted if they are held to manage the participation with own means or if their acquisition price does not exceed the undistributed profits from economic activities. Restructuring motives to separate risks or facilitate reinvestment are considered economically valid under Article 89.2 of the LIS.

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